Davis Polk Wins Decisive Victory for Credit Suisse in Research Analyst Class Action
On January 13, 2012, the U.S. District Court for the District of Massachusetts granted Credit Suisse summary judgment in a securities fraud class action that had been pending for nearly a decade, after first precluding the testimony of the plaintiffs’ expert on causation and damages. Davis Polk represented Credit Suisse and briefed and argued the motions.
The plaintiff class, investors who bought America Online-Time Warner (AOL) stock between January 2001 and July 2002, alleged that Credit Suisse published false and misleading research reports on AOL that failed to disclose the adverse effects of declining advertising on AOL’s business, and that AOL had engaged in accounting fraud and planned secret layoffs. Plaintiffs sought $3.8 billion in damages.
In December 2011, Judge Nathaniel Gorton, who was assigned to the case following the retirement of the prior judge, held a hearing on Credit Suisse’s motion to preclude the plaintiffs’ causation expert. At the hearing, Davis Polk argued that the expert’s analysis was fatally flawed because, among other things, it did not assess whether Credit Suisse’s research had any effect on AOL’s share price and his conclusions did not fit the evidence in the record.
In granting Credit Suisse’s motion, Judge Gorton noted that this was the first time in 20 years on the bench that he had precluded an expert from testifying. The Court then proceeded to grant summary judgment to Credit Suisse, ruling that even if the expert’s testimony were admissible, it did not create a triable issue of fact on loss causation.
The Davis Polk litigation team includes partner Lawrence Portnoy, counsel Daniel J. Schwartz, associates Dharma Betancourt Frederick, Jonathan K. Chang, Alan J. Tabak, and Moses Sternstein, and legal assistants Christina V. Carter and Kathleen A. Zink. All members of the Davis Polk team are based in the New York office.